SUDHIR NAGPAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This order shall dispose of a bunch of eight appeals bearing I.T.A. Nos. 463, 464, 559 of 2009, 49, 51 and 217 to 219 of 2010 as according to the learned counsel for the parties, the primary issue involved therein is identical. For brevity, the facts are being extracted from I.T.A. No. 463 of 2009. This appeal has been filed by the assessee under section 260A of the Income-tax Act, 1961 (in short "the Act"), against the order dated January 22, 2009, passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as "the Tribunal") in I.T.A. No. 352/ASR/ 2006 for the assessment year 2004-05. On May 24, 2010, all the appeals were admitted for determination of the following substantial questions of law:

(2.) Briefly stated, the facts necessary for adjudication of the present appeal are that five persons, namely, S/Sh. Sunil Nagpal, Sudhir Nagpal, Raj Kumar Nagpal, Adarsh Kumar Nagpal and Smt. Saraswati Nagpal were co-owners of the agricultural land known as "Nagpal Farms" inherited from their forefathers situated at Old Fazilka Road, Abohar, and executed a general power of attorney on March 26, 1996, in favour of Sudhir Nagpal appointing him to construct plinths on their joint agricultural land in the names of all the owners and to further lease out such open plinths to any party on their behalf. The land was not purchased for the purpose and it was inherited by them and they were the owners not in their joint capacity but in their individual capacity with a definite/defined proportion of share. Agreement dated November 15, 2002, was executed by the co-owners leasing out the plinths to the Punjab State Civil Supplies Corporation Ltd., Chandigarh, for the period which included the period assessable for the assessment year 2004-05. Sudhir Nagpal filed his return of income for the assessment year 2004-05 showing this central income and also paid tax accordingly. Vide assessment order dated December 20, 2005, the rental income was duly included in the said assessment. Similar returns were filed by the assessees in the cases of other co-owners wherever they were taxable and necessary tax was deposited in the treasury in accordance with law. Thereafter, the Assessing Officer issued notice under section 148 of the Act to all the co-owners of the property in the name of Sudhir Nagpal and others on the ground that there is association of persons (AOP) made by the co-owners and that income had escaped assessment in the hands of association of persons. The assessee was asked to file the return who filed return of income declaring nil income. It was pleaded that since no land was purchased, therefore, the status of the co-owners cannot be treated as association of persons and that the income of the plinths was assessed by the Department in the hands of individual as per their shares in the property. The Assessing Officer, vide order dated October 10, 2007, assessed it as an association of persons treating the entire income from plinths as income from other sources in the hands of association of persons determining tax payable by applying section 167B(2) of the Act. Against the order of the Assessing Officer, an appeal was filed before the Commissioner of Income-tax (Appeals), Bathinda (in short "the CIT(A)") who, vide order dated March 19, 2008, dismissed The appeal. Still feeling dissatisfied, the assessee filed an appeal before the Tribunal. The Tribunal, vide order dated January 22, 2009, rejected the appeal holding that the proceedings under section 147 of the Act have been rightly initiated and the income has rightly been assessed as an association of persons. Hence, the present appeal by the assessee.

(3.) We have heard learned counsel for the parties and have perused the record.